Roku's sale to Fox for $22 billion raises a big question

By Tomi Kilgore

Roku's stock falls and Fox shares log record selloff, as the equity component of buyout deal appears to irk investors

Roku's stock fell after the company agreed to be bought by Fox in a deal valued at $22 billion.

Roku agreed Monday to be bought by Fox Corp. in a deal valued at $22 billion, but shares of both companies fell as investors expressed disdain that terms of the buyout included a large equity component.

The companies said the deal lies "at the intersection of two of the most important forces reshaping video consumption": the continued growth of streaming and the strength of live sports and news. But there was also some question about whether the buyout might lead to Roku (ROKU) feature Fox programming over others.

The deal values Roku shares at $160 each, which is 11.4% above Friday's closing price of $143.66. Under the terms of the deal, Fox (FOXA) (FOX) will pay $96 in cash and 0.9693 of its Class A shares for each Roku share outstanding.

Before the deal was announced, Roku had a market valuation of $21.2 billion, according to FactSet data, while Fox was valued at $27.7 billion.

Roku's stock slipped 1.9% on Monday, closing about 12.5% below the buyout price. Meanwhile, Fox Class A shares dropped 16.8%, for their biggest one-day selloff since they went public in March 2019. Investors in acquirers tend to dislike deals that involve issuing new stock, as increasing the shares outstanding reduces the percentage of the company owned by current shareholders.

Also, keep in mind the deal's announcement comes after Roku's stock soared 20.1% on Friday, when Bloomberg reported that Roku had held talks with a media company about a potential sale.

Fox said it's committed to Roku continuing to operate as an "open, partner friendly platform," which also includes the "ubiquitous distribution of Fox content."

When reports of a potential sale of Roku surfaced, there was a concern that an acquisition by a media company could raise questions of bias.

Rosenblatt analyst Barton Crockett wrote in a note before the deal was announced that Roku is "strategically focused on promoting all content providers, so the risk of a media company merger tainting that neutrality could be an issue."

And Citizens analyst Matthew Condon touched on those concerns as well, saying in his view that one of the primary benefits to a media company acquiring Roku would be "a unique distribution advantage." Condon also believes it provides Fox with "a differentiated data asset to power its advertising business."

Meanwhile, Fox said the deal is a "natural extension" of the growth strategy, in which it reoriented the company around live news and sports, and acquired streaming service Tubi in 2020.

"Today, we take the next step: bringing together the most valuable live content portfolio in video consumption with the preeminent streaming platform through which America watches it," said Fox CEO Lachlan Murdoch.

Roku's stock has run up 31.5% in 2026, while Fox shares have lost 24.9%. The S&P 500 index SPX has gained 10.1% this year.

Fox and News Corp (NWSA) (NWS), parent of MarketWatch publisher Dow Jones, share common ownership.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-15-26 1903ET